Summary Endothelial cells play a critical role in multiple aspects of lung development and homeostasis, yet the precise mechanisms that regulate vasculogenesis and how endothelial cells signal to other cell types to orchestrate lung development have not been well defined. Accurate regulation of these processes is critical to ensure proper lung development and prevent bronchopulmonary dysplasia (BPD), a lung disease of premature infants that often results in life-long complications. Hallmarks of BPD are impaired vasculature and arrested lung development. We created three-dimensional (3D) co-culture systems in which lung endothelial cells (LuMECs) drive the putative lung stem cells, BASCs, to produce bronchiolar or alveolar organoids. These organoid cultures provide an opportunity to model interactions that occur between endothelial cells and alveolar cells during lung development. Using this system, we discovered a novel BMP4-NFATc1- Thrombospondin (TSP1) pathway in endothelial and epithelial cells in the adult lung. We showed that TSP1, known as an anti-angiogenic factor, is required for the development of alveolar organoids. We also identified R-spondin2 (Rspo2), which regulates Wnt signaling in other systems, as a BMP4-regulated protein that may be downstream of TSP1 in endothelial cells. The mechanisms underlying TSP1 regulation of lung vascular development and alveolarization are unknown. We hypothesize that endothelial-derived TSP1 induced by BMP4-NFATc1 signaling inhibits pulmonary vascular development and is required for proper lung development. Further, we posit that vascular lung injury, such as that seen with hyperoxia exposure, impairs TSP1 signaling, thereby altering vasculogensis and blocking alveolar development. In Aim 1, we will determine how TSP1- CD47 interactions regulate vasculogenesis and lung development. Defective lung endothelial cells from mice exposed to hyperoxia will be used in lung organoid co-cultures to test the impact of impaired endothelial cell signals on alveolarization. Similarly, cells from knockout mice will be used in neonatal lung organoid cultures to determine the effect of CD47 deficiency on alveolar development. CD47-knockout mice and endothelial- specific TSP1-knockout mice will be used to test the role of TSP1-CD47 interactions in the response to neonatal hyperoxia-mediated lung vascular injury in vivo. In Aim 2, we will define the mechanisms by which TSP1-dependent Rspo2 mediates pulmonary vascular development by evaluating ligand response in vitro and after neonatal hyperoxic injury in vivo. Recombinant Rspo2 will be used in neonatal lung organoid cultures and in assays for endothelial cell proliferation, migration and tube formation. We will determine if lung endothelial cell secreted factors, and more specifically, Rspo2, is sufficient for prevention of neonatal hyperoxia-mediated lung injury. These studies will elucidate mechanisms by which lung endothelial cells drive critical outcomes in development. This work will determine if defective TSP1-dependent signaling is a mechanism of interrupted lung development in premature infants with BPD, leading to new ways to direct therapy for BPD.